The upcoming earnings reports of major IT companies are expected to show a weak performance, according to brokerage firms. Morgan Stanley predicts that poor
earnings in the first and second quarters will likely result in downgrades to the consensus EPS estimates for 2024 fiscal.
Jefferies expects a decline in aggregate revenue for the
IT sector in the first quarter, coupled with a margin contraction due to wage hikes. They also anticipate that Infosys will lower its revenue growth guidance for the fiscal by 100 basis points, bringing it down to 6 percent.
Ambit predicts that
IT companies will revise their growth expectations for the fiscal year 2024 downwards. It also expects Infosys and LTIMindtree to lower their growth guidance.
On the other hand, HSBC emphasises that the outlook for the second quarter will be crucial to protect stocks from further decline. It notes that near-term triggers are lacking, and most funds have an underweight position on the IT sector. Additionally, the firm has downgraded Tech Mahindra and LTIMindtree to a Hold rating.
First Published: Jul 3, 2023 4:21 PM IST